UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549





FORM 10-Q





x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended March 31, 2010





 ̈  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





Commission file number 000-26309





INTEGRATED ENVIRONMENTAL TECHNOLOGIES, LTD.


(Exact name of registrant as specified in its charter)





Nevada
98-0200471(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)





4235 Commerce StreetLittle River, South Carolina

29566(Address of principal executive offices)

(Zip Code)





(843) 390-2500


(Registrant’s telephone number, including area code)





Copies of Communications to:


Stoecklein Law Group


Emerald Plaza


402 West Broadway


Suite 690


San Diego, CA 92101


(619) 704-1310


Fax (619) 704-0556





Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes x    No  ̈





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yes  ̈   No  ̈





Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer   ̈
Accelerated filer   ̈Non-accelerated filer   ̈ (Do not check if a smaller reporting company)
Smaller reporting company  x





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Yes  ̈    No x





The number of shares of Common Stock, $0.001 par value, outstanding on May 5, 2010, was 104,906,228 shares.








PART I – FINANCIAL INFORMATION





Item 1. Financial Statements.





Integrated Environmental Technologies, Ltd.Condensed Consolidated Balance SheetsMarch 31,


December 31,2010


2009Unaudited


AuditedAssetsCurrent Assets:Cash

$
323,526


$
819,611Accounts receivable


135,457



111,375Inventory


215,503



82,910Prepaid expenses


25,072



20,256Total current assets


699,558



1,034,152Equipment


20,445



20,445Accumulated depreciation


(12,545
)


(11,597
)Total building and equipment


7,900



8,848$
707,458


$
1,043,000Liabilities and Shareholders' Equity (Deficit)Current liabilities:Accounts payable

$
141,951


$
112,057Accrued expenses


203,124



189,386Notes payable


-



98,300Convertible notes


216,500



489,000Total current liabilities

$
561,575


$
888,743Shareholders' Equity (Deficit)Common stock 200,000,000 shares authorizedpar value $.001, 102,779,750 and 94,533,467 shares issuedand outstanding at March 31, 2010 and December 31, 2009

$
102,780


$
94,533Stock bought not issued, 128,000 and 6,264,000 sharesat March 31, 2010 and December 31, 2009


128



6264Paid-in capital


11,889,241



11,384,911Retained earnings (deficit)


(11,846,266
)


(11,331,451
)Total shareholders' equity


145,883



154,257Total liabilities and shareholders' equity

$
707,458


$
1,043,000








See notes to condensed consolidated financial statements.


1


Integrated Environmental Technologies, Ltd.Condensed Consolidated Statements of Operations(Unaudited)For The Three Months Ended March 31,2010


2009Sales

$
67,219


$
34,953Licensing Fees


718



-Total revenue


67,937



34,953Cost of sales


33,361



16,882Gross profit


34,576



18,071Professional and administrative fees


129,577



82,183Salary


263,624



162,958Depreciation and amortization


947



392Office & miscellaneous expense


91,445



98,919Bad debt expense


2,706



30Total operating expenses


488,299



344,482Loss from operations


(453,723
)


(326,411
)Other income (expense):Finance fees


(52,838
)


(60,489
)Interest expense


(8,253
)


(24,359
)Total other income (expense)


(61,091
)


(84,848
)Net loss

$
(514,814
)

$
(411,259
)Weighted average shares outstanding


101,335,722



79,058,467Net loss per share basic and diluted

$
(0.01
)

$
(0.01
)








See notes to condensed consolidated financial statements.





2


Integrated Environmental Technologies, Ltd.Condensed Consolidated Statements of Cash FlowsUnauditedFor The Three Months EndedMarch 31,2010


2009Cash flows from operating activities:Net loss

$
(514,814
)

$
(411,259
)Adjustments to reconcile net loss to net cashused in operating activities:Depreciation and amortization


948



392Stock and warrants issued for loan or interest costs


59,540



-Stock and warrants issued for services


117,000



60,489Changes in operating assets and liabilities:Accounts receivable


(24,082
)


(3,748
)Inventory


(132,593
)


15,837Deposits and prepaids


(4,815
)


11,537Accounts payable


29,894



(10,418
)Accrued expenses


13,737



28,929Cash used in operating activities


(455,185
)


(308,241
)Cash flows from financing activities:Proceeds from the sale of stock


18,000



-Payment on notes payable


(75,000
)


307,500Proceeds from the exercise of warrants and options


16,100



-Cash provided by financing activities


(40,900
)


307,500Decrease in cash


(496,085
)


(741
)Cash beginning of period


819,611



33,357Cash end of period

$
323,526


$
32,616Supplemental disclosure of cash flow information:Cash paid for interest

$
8,253


$
-Cash paid for income taxes

$
-


$
-Non-cash financing activities:Stock and warrants issued for services

$
117,000


$
60,489Notes and interest converted to stock

$
295,800


$
-Warrants issued for loan costs

$
59,540


$





See notes to condensed consolidated financial statements.


3
 Integrated Environmental Technologies, Ltd.
 Notes to Condensed Consolidated Financial Statements


Note 1 – Basis of presentation





The unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation.  All such adjustments are of a normal recurring nature.  The results of operations for the interim period are not necessarily indicative of the results to be expected for a full year.  Certain amounts in the prior year statements have been reclassified to conform to the current year presentations.  The statements should be read in conjunction with the financial statements and footnotes thereto included in our Form 10-K for the year ended December 31, 2009.





The financial statements include the Company’s wholly-owned subsidiary.  All significant inter-company transactions and balances have been eliminated.





Note 2 - Going concern





The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  The Company’s ability to continue as a going concern is dependent upon attaining profitable operations.  The Company may consider using borrowings and security sales to mitigate the affects of its cash position; however, no assurance can be given that debt or equity financing, if and when required, will be available.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue in existence.





Note 3 - Notes payable





The Company had no outstanding notes payable at March 31, 2010.





Note 4 - Convertible notes payable





As of March 31, 2010, the Company had convertible loans totaling $216,500, which are accruing interest at a rate of 10% per annum payable semi-annually.  The Company has extended the original maturity date of January 2, 2009, and will continue to accrue interest at a rate of 10% per annum until these notes are paid.  The notes are currently in default.





Note 5 – Common stock





In the quarter ended March 31, 2010, the Company issued 6,264,329 shares of restricted common stock that were un-issued as of December 31, 2009.





In the quarter ended March 31, 2010, the Company sold a total of 180,000 shares for a total purchase price of $18,000.


4
 Integrated Environmental Technologies, Ltd.
 Notes to Condensed Consolidated Financial Statements


On January 13, 2010, an option holder exercised 10,000 options at a price of $0.11 per share for a total purchase price of $1,100.  The 10,000 shares were issued on January 14, 2010.





On January 20, 2010, an individual exercised 123,214 warrants through a cashless exercise by tendering to the Company its warrant to purchase 150,000 shares, thereby using the 26,786 remaining warrant shares to satisfy the exercise price.  The 123,214 shares were issued on January 20, 2010.





On January 21, 2010, the Company authorized the issuance of a total of 450,000 shares of its restricted common stock to certain employees as contract compensation or as bonus in lieu of cash compensation, and to directors as compensation for attendance of board meetings.  These shares were issued on February 2, 2010.  The total expense was $117,000, which represented the fair market value of the shares on the date the awards were made.





On February 12, 2010, certain note holders converted $240,500 of principal amounts due under their debenture agreements at a conversion rate of $0.25 per share of common stock.  The 962,000 shares were issued on February 25, 2010.





On March 1, 2010, certain note holders converted $32,000 of principal amounts due under their debenture agreements at a conversion rate of $0.25 per share of common stock.  The 128,000 shares were subsequently issued on April 15, 2010.





On March 5, 2010, a note and accrued interest totaling $26,685 were converted into 106,740 shares of restricted common stock at a conversion rate of $0.25 per share.  The shares were issued on March 11, 2010.





On March 30, 2010, a warrant to purchase 150,000 shares at a price of $0.10 per share, for a total purchase price of $15,000, was exercised.  The 150,000 shares were issued on March 31, 2010.





Note 6 – Options and warrants





A summary of stock options and warrants is as follows:





Options
Average

Price
Warrants
Average

PriceOutstanding  1/1/2010
1,075,000
$    0.11
17,379,582
$        0.12Granted
-
-
525,000
0.18Cancelled
-
-
-
-Exercised
10,000
0.11
300,000
.08Outstanding 3/31/2010
1,065,000
$    0.11
17,604,582
$        0.13





5
 Integrated Environmental Technologies, Ltd.
 Notes to Condensed Consolidated Financial Statements


On February 25, 2010, the Company issued 225,000 warrants to purchase restricted shares of its common stock at $0.28 per share, issued in connection with consulting services.  The value of the services was $35,818 which will be expensed over the one-year period of the consulting agreement.  For the quarter ended March 31, 2010, the Company expensed $3,317 as professional fees.





On March 5, 2010, the Company granted 300,000 warrants to purchase restricted shares of its common stock at $0.10 per share, issued in connection with its borrowings.  The Company expensed as loan costs $52,838 in the period ended March 31, 2010.





The fair market value of the warrants determined using the Black-Scholes model with the following weighted average assumptions:  Strike Price $0.18; Stock Price $0.22; Term 2.09 years; Dividend Yield 0%; Volatility 153%; and Interest Rate 1.10%.





Note 7 – Related-party transactions





The Company had a consulting agreement with a shareholder requiring payments of $3,000 per month.  On March 1, 2010, the term and scope of the agreement were revised, and compensation was increased to $6,000 per month.  As of March 31, 2010, the Company recorded $9,000 in consulting fee expense.





The Company has employment agreements with two of its executives through March 30, 2012, whereby the Company agreed to annual compensation in the amount of $240,000.  As of March 31, 2010, the future minimum payments are as follows:





Related-party compensation requirements2010

180,0002011

240,000Thereafter

60,000Total
$
480,000





Note 8 – Commitments and Contingencies





The Company entered into a lease agreement for its premises on January 1, 2006 for a three-year term.  In January 2009, the Company agreed to renew the lease for a term of five years for $71,291 per year.  The renewal term shall be upon the same covenants, conditions, and provisions as provided in the original lease.





Note 9 – Subsequent events





The Company evaluated all subsequent events through May 13, 2010, the date the financial statements were issued, and have determined that the following events require disclosure in these financial statements.


6
 Integrated Environmental Technologies, Ltd.
 Notes to Condensed Consolidated Financial Statements


On April 1, 2010, the Company entered into a corporate services agreement with 3CD Consulting, LLC and Cap Briant (“3CD”), wherein 3CD agreed to perform services relative to the introduction of marketing programs and to provide resources for the purpose of advancement of the Company in its executive summary and business plan.  The term of the agreement is for twelve months.  We agreed to compensate 3CD with 200,000 shares of the Company’s restricted common stock for a purchase price of $0.001 per share.  The Company further agreed to compensate 3CD with warrants to purchase 400,000 shares of common stock, exercisable at $0.30 per share through December 31 2011.  Pursuant to receipt of $200, the 200,000 shares were issued on April 26, 2010.





On April 7, 2010, an individual exercised 68,478 warrants through a cashless exercise by tendering to the Company its warrant to purchase 150,000 shares for $0.25 per share, thereby using the 81,522 remaining warrant shares to satisfy the exercise price.  The 68,478 shares were issued on April 26, 2010.





On April 7, 2010, a warrant to purchase 500,000 shares at a price of $0.10 per share, for a total purchase price of $50,000, was exercised.  The 500,000 shares were issued on April 30, 2010.





On April 8, 2010, a warrant to purchase 200,000 shares at a price of $0.05 per share, for a total purchase price of $10,000, was exercised.  The 200,000 shares were issued on April 26, 2010.





On April 8, 2010, the Board authorized the offering of a maximum aggregate amount of $750,000 in 8% annual interest convertible debentures, to be offered in increments of $50,500.  The instruments shall have a one-year term with a $0.60 conversion-to-common-stock rate.  Each $50,500 unit includes 50,000 warrants to purchase the Company’s common stock with consideration of $0.01 per warrant.  These warrants may be exercised for $0.75 per share from inception through December 31, 2010, or for $1.20 per share from January 1, 2011 through December 31, 2011.  On April 16, 2010, the Company sold 5 units for a total purchase price of $252,500.





On April 12, 2010, warrants to purchase 530,000 shares at a price of $0.10 per share, for a total purchase price of $53,000, were exercised.  The 530,000 shares were issued on April 15, 2010.





On April 12, 2010, the Company borrowed $250,000 from an individual at a variable interest rate, with interest payments due on the first of each month.  The principal and any accrued but unpaid interest are due November 1, 2010.  Any principal amount not paid by this date shall bear interest at a rate of 10% higher than would otherwise be applicable.  The Company agreed to pay a closing fee of $2,500.  In addition, the Company agreed to issue 150,000 warrants exercisable for $0.60 per share from inception through December 31, 2010, or for $1.00 per share from January 1, 2011 through June 30, 2011, for additional consideration of $.001 per share, deemed paid as part of the closing fee.





On April 15, 2010, the Company issued 128,000 shares of common stock that were un-issued as of March 31, 2010.


7
 Integrated Environmental Technologies, Ltd.
 Notes to Condensed Consolidated Financial Statements


On April 15, 2010, a warrant to purchase 500,000 shares at a price of $0.10 per share, for a total purchase price of $50,000, was exercised.  The 500,000 shares were issued on April 30, 2010.





On April 30, 2010, a warrant to purchase 500,000 shares at a price of $0.10 per share, for a total purchase price of $50,000, was exercised.  The 500,000 shares were issued on May 12, 2010.








8


FORWARD-LOOKING STATEMENTS





This document contains forward-looking statements. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.





Forward-looking statements may include the words “may”, “could”, “estimate”, “intend”, “continue”, “believe”, “expect” or “anticipate” or other similar words.  These forward-looking statements present our estimates and assumptions only as of the date of this report.  Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. Additionally, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements as a result of being a penny stock issuer. You should, however, consult further disclosures we make in future filing of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.





Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.  Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.  The factors impacting these risks and uncertainties include, but are not limited to:


o
the unavailability of funds for capital expenditures and/or general working capital;


o
implementation of our business plan within the oil and gas industry with Benchmark;


o
increased competitive pressures from existing competitors and new entrants;


o
increases in interest rates or our cost of borrowing or a default under any material debt agreements;


o
the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require our management to make estimates about matters that are inherently uncertain;


o
substantial dilution to our stockholders as the result of the issuance of our common stock in exchange for debt and/or equity financing;


o
potential change in control upon completion of financing agreements, if any;


o
deterioration in general or regional economic conditions;


o
adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;


o
changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;


o
loss of customers or sales weakness;


o
excessive product failure and related warranty expenses;


o
inability to achieve future sales levels or other operating results; and


o
operational inefficiencies in distribution or other systems.




9


For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Part II, Other Information, Item 1A, Risk Factors” in this document and in our Annual Report on Form 10-K for the year ended December 31, 2009.





Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.





The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this quarterly report. References in the following discussion and throughout this quarterly report to “we”, “our”, “us”, “IET”, “the Company”, and similar terms refer to Integrated Environmental Technologies, Ltd. and its wholly-owned subsidiary, IET, Inc., unless otherwise expressly stated or the context otherwise requires.





OVERVIEW AND OUTLOOK





Integrated Environmental Technologies, Ltd. is a life sciences-focused technology company that commercializes innovative technologies which are focused on the enhancement of the environment and the health, safety, and well-being of current and future generations.  Our wholly-owned subsidiary, I.E.T., Inc., designs, manufactures, markets, sells, and installs proprietary EcaFlo® equipment, featuring electro-chemical activation (“ECA”) technology, in the United States and throughout the world.





The core of our business is the commercialization of ECA technology.  ECA technology is a process of passing a diluted saline solution and ordinary water through an electrolytic cell in order to generate, by electrochemical energy conversion, environmentally-responsible, highly-active, meta-stable solutions which possess electron-donor or electron-acceptor properties known as Catholytes and Anolytes.





Our equipment and the solutions our equipment produces remain the focus of our revenue strategy.  We produce and sell ECA equipment and related supplies under the EcaFlo® trade name, including three models of EcaFlo® equipment:  C-101, C-102 and C-104.  These pieces of equipment generate varying volumes of the hospital-level disinfectant trademarked EcaFlo® Anolyte.  Our business model primarily calls for the sale of EcaFlo® equipment, at contract prices, to existing, reputable, successful industry leaders within different markets (i.e.:  Benchmark – Oil and Gas; D2W2 – Food Processing).  While we profit from sales of EcaFlo® equipment, there are costs of goods sold and general and administrative costs associated with these sales.  Our plan also calls for technology fees to be paid to us on the EcaFlo® fluid solutions that are generated by our distributors and sold to their customers.  The fees are at reasonable rates on a per-gallon-sold basis and have absolutely no cost to us.  These technology fees are a sustaining revenue source and will build as we sell and install each piece of EcaFlo® equipment.  In addition to establishing a solid distribution network, we make sales directly to customers, on a limited basis, in order to effect initial penetration into some lucrative markets.


10


We are highly focused on commercialization of our products in the oil and gas industry. The combination of demand for gas, rubbing up against environmental concerns regarding “fracking” fluids permeating ground-water tables and water supplies, is providing the impetus in our monetizing this technology.  Our oil and gas industry partner, Benchmark Energy Products, LLC, is producing EcaFlo® solutions tailor-made to answer the needs of the oil and gas markets through an Exclusive License and Distribution Agreement.  Recently we announced that the EPA-registered product, Excelyte®, had been successfully utilized in a number of gas well fracturing treatments.  The primary use of Excelyte® is to eliminate oilfield bacteria in water employed in oil and gas wells.





Our solutions have developed strong commercial interest and substantial market potential:





·
EcaFlo® Anolyte – a strong oxidizing solution formed from naturally occurring elements that kills unwanted microorganisms and pathogens, and


·
EcaFlo® Catholyte – an anti-oxidizing, mildly alkaline solution ideal for use as a degreaser, cleaner, and detergent.




EcaFlo® Anolyte, an EPA-registered product, could conceivably replace all applications for chlorine-related antimicrobials from an efficacy and efficiency standpoint.  Our commercialization of this product is premised upon the compelling economics, given the low cost to produce Anolyte and the environmentally friendly nature of the product.  The product can be as much as 100 times more effective than the bleach solutions traditionally used to mitigate pathogens in food processing, water disinfection, and fungicidal control.  The product quickly destroys microorganisms and pathogens on fruits, vegetables, and processing equipment without leaving a harmful residue.





After several years of product and market development, we are seeing strong demand for our current generation equipment from commercial users in the oil and gas industry as well as from a global fresh food packager.





We have incurred losses since inception.  For the fiscal year ended December 31, 2009, we had a net loss of $2,798,404 as compared to a net loss of $1,548,392 for the fiscal year ended December 31, 2008.  Our ability to proceed with our plan of operation has continuously been a function of our ability to increase revenues and raise sufficient capital to continue our operations.





Management intends to continue to closely monitor the costs associated with the production of EcaFlo®devices in an attempt to minimize capital shortages.  As we continue to expand operational activities and execute our business plan, we anticipate experiencing positive cash flows from operations in future quarters.  Debt borrowings may be considered from time to time, if needed.





Currently, management is focused on:




-
securing additional patent protection for the Company’s new “EC” electrolytic cell;


-
expansion of manufacturing facility in order to increase production capabilities;


-
a final in-plant “demonstration” of EcaFlo® fluid solutions in a food processing facility, prior to installation of EcaFlo® equipment into a fully integrated sanitation system;


11





-
finalizing processes for technology fee reporting and billing for oil and gas applications;


-
developing entry into specific vertical markets with new distribution networks and personnel;


-
making changes to the Company’s EPA product registration “master label” to include the addition of certain microorganisms and a change to “shelf life” verbiage; and


-
meetings and negotiations of contract terms within the two largest market areas served by IET’s key distributors, Benchmark and D2W2.




Obtaining a patent on our “EC” electrolytic cell will further secure the Company’s ability to manufacture the most reliable, high-volume producing, pH neutral anolyte product, IET’s EcaFlo® Anolyte.  Demonstration of EcaFlo® fluid solutions in an in-plant sanitation system, to “prove positive” the efficacy and ease of use, is the final step to commercialization in a major food processing application.  Risk of failure in this demonstration has been mitigated by carefully developed protocols and implementation.  Entry into new markets, through a proven distribution vehicle, will serve to expand our markets and provide acceptance of EcaFlo® Anolyte as the preferred “green” disinfectant that replaces traditional, hazardous disinfectant chemicals.  IET continues to focus on educating consumers and the investing public about the differences between “cleaning,” “sanitizing” and “disinfecting”, and how those classifications relate to the development of commercial markets for EcaFlo® solutions.  As we seek and obtain modifications to our EPA product registration “master label,” we open more doors for the use of EcaFlo® Anolyte in different areas.  In the unlikely event that our proposed changes are not accepted, our current EPA product registration (EPA Registration No. 82341-1) affords us the ability to continue to serve the oil and gas industry, as well as food processing, hard-surface disinfection, and many other applications.  Meetings and contract negotiations could result in future material events for IET.





Results of Operations for the Three Months Ended March 31, 2010 and 2009





The following table summarizes selected items from the statement of operations at March 31, 2010 compared to March 31, 2009.





SALES AND COST OF SALES:





Three Months Ended

March 31,

Increase (Decrease)2010

2009

$

%Sales and Licensing Fees

$67,937

$34,953

$32,984

94%Cost of Sales

33,361

16,882

16,479

98%Gross Profit

34,575

18,071

16,504

91%Gross Profit Percentage of Sales

51%

52%

--

(1%)





12


Sales





Our sales for the three months ended March 31, 2010 were $67,937, an increase of 94% over sales of $34,953 in the three months ended March 31, 2009.  The increase in sales was as a result of finalizing conclusive agreements with distributors, and continuing to develop opportunities in targeted markets.





During the first quarter of 2010, equipment orders and technology fee billings have increased significantly, producing a backlog of orders and resulting in approximately $900,000 in pending sales as of March 31, 2010.





Cost of sales / Gross profit percentage of sales





Our cost of sales for the three months ended March 31, 2010 was $33,361, an increase of $16,479, or 98%, from $16,882 for the three months ended March 31, 2009.  The increase in our cost of sales is as a result of an increase in sales for this period.  We are continuing to update and upgrade our product line and we closely monitor the cost of all of our products.  We believe the cost of sales will increase slightly less as a percentage of sales when we have additional sales.





As of the three months ended March 31, 2010, gross profit margins remained fairly constant at 51%, as compared to 52% from the prior year.  We anticipate that this margin will increase in the future as equipment sales increase, since our pricing structure allows for more profit on equipment sales than on replacement parts and laboratory testing supplies.





EXPENSES:





Three Months Ended

March 31,
Increase (Decrease)2010
2009
$
%Expenses:Professional and

administrative fees
$129,577
$82,183
$47,394
58%Salary
263,624
162,958
100,666
62%Depreciation and amortization
947
392
555
142%Office and miscellaneous expense
91,445
98,919
(7,474)
(8%)Bad debt expense
2,706
30
2,676
8,920%Total operating expenses
488,299
344,482
143,817
42%(Loss) from operations
(453,723)
(326,411)
127,312
39%Other income (expense):Finance fees
(52,838)
(60,489)
(7,651)
(13%)Interest expense
(8,253)
(24,359)
(16,106)
(66%)Total other income (expense)
(61,091)
(84,848)
(23,757)
(28%)Net (loss)
$(514,814)
$(411,259)
$103,555
25%





13


Professional and Administrative Fees





Professional and administrative fees for the three months ended March 31, 2010 were $129,577, an increase of $47,394, or 58%, from $82,183 for the three months ended March 31, 2009.  The increase in professional and administrative fees was the result of utilizing the services of financial consultants to assist us in developing plans for financings and the improvement of share value.  Whenever possible, we are trying to reduce the use of outside consultants, but we will still need some assistance for areas of our business in which we do not have sufficient in-house expertise.





Salary Expenses





Salary expenses for the three months ended March 31, 2010 were $263,624, an increase of $100,666, or 62%, from $162,958 for the three months ended March 31, 2009.  The increase in salary expenses was the result of additions to our engineering, production, and administrative staff, as well as increases in individual employees’ pay during this time.  We expect salary expense to increase in the future as the Company grows and as sales volume increases.  We may need to continue issuing stock and stock options in exchange for services and adequate personnel compensation.





Depreciation and Amortization Expenses





Depreciation and amortization expenses for the three months ended March 31, 2010 were $947, an increase of $555 from $392 for the three months ended March 31, 2009.  The increase in depreciation expenses was the result of the purchase of additional depreciable equipment in 2009.





Office and Miscellaneous Expenses





Office and miscellaneous expenses for the three months ended March 31, 2010 were $91,445, a decrease of $7,474, or 8%, from $98,919 for the three months ended March 31, 2009.  The decrease in office and miscellaneous expenses was primarily the result of a decrease in health insurance costs paid during this period.





Bad Debt Expenses





Bad debt expenses for the three months ended March 31, 2010 were $2,706, an increase of $2,676 from $30 for the three months ended March 31, 2009.  The increase in bad debt expenses was as a result of one of our former vendors not delivering a portion of the services for which we pre-paid.  We have historically had limited write-offs as the result of bad debts.  We continually evaluate the creditworthiness of our customers and typically require a deposit of 50% of the total purchase price with each EcaFlo® equipment order.  We evaluate the collectability of accounts receivable regularly and it is our policy to record an allowance when the results of the evaluation indicate an increased risk related to the customer's ability to meet their financial obligations.


14


Loss from Operations





The loss from operations for the three months ended March 31, 2010 was $453,723, an increase of $127,312, or 39%, from $326,411 for the three months ended March 31, 2009.  The increase in the loss from operations was the result, in part, of the increases in professional and administrative fees and salary expenses necessary for the growth of the Company.





Finance Fees





Finance fees for the three ended March 31, 2010 were $52,838, a decrease of $7,651 from $60,489 for the three months ended March 31, 2009.  The decrease in finance fees was due to a decrease in temporary working capital loans needed during this time.





Interest Expense





Interest expense for the three months ended March 31, 2010 was $8,253, a decrease of $16,106, or 66%, from $24,359 for the three months ended March 31, 2009.  The decrease in interest expense was as a result of having paid off a number of our convertible debentures, as well as all other outstanding notes payable during this period.





Net (Loss)





Our net loss for the three months ended March 31, 2010 was $514,814, an increase of $103,555, or 25%, from $411,259 for the three months ended March 31, 2009.  We continue to have a net loss and believe the loss will be reduced and profitability will be attained in future quarters as the sales of our products increase.





Liquidity and Capital Resources





The following table summarizes total current assets, total current liabilities and working capital at March 31, 2010 compared to December 31, 2009.





March 31, 2010
December 31, 2009
Increase / (Decrease)$
%Current Assets
$699,558
$1,034,152
($334,594)
(32%)Current Liabilities
561,575
888,743
($327,168)
(37%)Working Capital (deficit)
$137,983
$145,409
($7,426)
(5%)





Current assets for the three months ended March 31, 2010 were $699,558, a decrease of $334,594, or 32%, for the quarter.  Utilization of cash to reduce debt resulted in this decrease.  Congruently, current liabilities for the same period decreased $334,594, or 37%, from $888,743 for the year ended December 31, 2009.





15


At March 31, 2010, our cash balance was $323,526.  We believe that our cash on hand will be sufficient to meet our capital and operating requirements for at least the next quarter.  Our future capital requirements, however, will depend on numerous factors, including without limitation, potential acquisitions and/or joint ventures, purchases of our stock and future results of operations.





In addition to sales-generated revenue, we continue to use traditional and/or debt financing, to provide the capital we need to run the business.  In the future, we plan to generate enough revenues from the sales of our products in order for us to not have to sell additional stock or obtain additional loans.





To meet the backlog for IET’s EcaFlo® equipment, the Company is nearing the half-way point of a facility expansion in order to quadruple the production capacities for manufacturing.  Additionally, we continue to anticipate an increase in employees in the next twelve months as we add assembly personnel, shipping and receiving personnel and additional administrative support personnel.





On August 17, 2006, we received an unsecured loan of $25,000 from a shareholder at a variable interest rate.  On March 5, 2010, the Board authorized the conversion of the outstanding principal and interest into restricted shares of the Company’s common stock at a conversion rate of $0.25 per share.  106,740 shares were issued as payment in full on March 11, 2010.




The Company borrowed $50,000 from Defense Technology Systems, Inc. (“DTS”) on August 15, 2006 and $25,000 from Red River Capital on October 1, 2006.  These notes were to mature on September 30, 2006; however, repeated attempts to contact the Lenders regarding repayment were unsuccessful.  Cove Partners, LLC received an assignment of assets from DTS and Red River Capital, and on January 8, 2010, $75,000 in principal and $7,500 in loan fees were repaid.




As of March 31, 2010, we had convertible loans totaling $216,500, which are accruing interest at a rate of 10% per annum payable semi-annually.  We extended the original maturity date of January 2, 2009, and will continue to accrue interest at a rate of 10% per annum until the notes are paid.  The notes are currently in default.





Going Concern





The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern.  The Company’s ability to continue as a going concern is dependent on attaining profitable operations.  The Company's cash position may be inadequate to pay all of the costs associated with testing, production and marketing of products.  Management will consider borrowings and security sales to mitigate the effects of its cash position; however, no assurance can be given that debt or equity financing, if and when required, will be available.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence.


16


Critical Accounting Policies and Estimates





Our discussion of financial conditions and results of operations is based upon the information reported in our financial statements.  The preparation of these statements requires us to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities at the date of our financial statements.  We base our assumptions and estimates on historical experience and other sources that we believe to be reasonable at the time.  Actual results may vary from our estimates due to changes in circumstances, weather, politics, global economics, mechanical problems, general business conditions and other factors.  Our significant estimates are related to the valuation of warrants and options.





Revenue Recognition





We recognize sales revenue when title passes and all significant risks of ownership change, which occurs either upon shipment or delivery based on contractual terms.





Off-Balance Sheet Arrangements





As of March 31, 2010, we did not have any off-balance sheet arrangements that had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.





Item 3. Quantitative and Qualitative Disclosures About Market Risk





Concentration of Credit Risk





We sell products to customers in diversified industries and geographical regions.  During the years ended December 31, 2009 and 2008, three of our customers represented 26%, 24%, and 12% and 41%, 16%, and 12% of sales, respectively.  We continually evaluate the creditworthiness of our customers and typically require a deposit of 50% of the total purchase price with each EcaFlo® equipment order.





We evaluate the collectability of accounts receivable regularly and it is our policy to record an allowance when the results of the evaluation indicate an increased risk related to the customer's ability to meet their financial obligations.  As of December 31, 2009 and 2008, there was no reserve for bad debts.


17


Item 4T. Controls and Procedures.





Evaluation of Disclosure Controls and Procedures





Our Chief Executive Officer and Principal Financial Officer, William E. Prince, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report.  Based on that evaluation, Mr. Prince concluded that our disclosure controls and procedures are effective in timely alerting him to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings and in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.





Changes in Internal Control Over Financial Reporting





There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





PART II – OTHER INFORMATION





Item 1. Legal Proceedings.





We are not a party to any material legal proceedings.





Item 1A. Risk Factors.





FACTORS THAT MAY AFFECT OUR RESULTS OF OPERATIONS





We are required to make accounting estimates and judgments in preparing our consolidated financial statements.





In preparing our consolidated financial statements in accordance with accounting principles generally accepted in the United States, we make certain estimates and assumptions that affect the accounting for and recognition of assets, liabilities, revenues and expenses.  These estimates and assumptions must be made because certain information that is used in the preparation of our consolidated financial statements is dependent on future events, or cannot be calculated with a high degree of precision from data available.  In some cases, these estimates are particularly difficult to determine and we must exercise significant judgment.  The estimates and the assumptions having the greatest amount of uncertainty, subjectivity and complexity are related to our accounting for bad debts, returns and allowances, warranty and repair costs, derivatives, and asset impairments.  Actual results could differ materially from the estimates and assumptions that we use, which could have a material adverse effect on our financial condition and results of operations.


18


Our auditor’s report reflects the fact that without realization of additional capital, it would be unlikely for us to continue as a going concern.





At December 31, 2009 and March 31, 2010, our auditors have included a paragraph in their report regarding substantial doubt about our ability to continue as a going concern.  Our plans in this regard are to seek additional funding through sales-generated revenue, future equity private placements with traditional financing firms and/or with an industry partner, or debt facilities.  Our goal is to reduce the need for debt or equity financing, and trend toward operating from revenue from the sales of our equipment and receipt of technology fees.





We have minimal operating history, which raises concern as to our ability to successfully develop profitable business operations.





We have a limited operating history.  However, our management team has extensive experience in project development and managing corporate assets.  A highly successful professional who brings more than three decades of business development experience to us from the environmental engineering industry heads our marketing and sales department.  The Company’s engineering department is headed by a former member of the military, who has expertise that centers on the primary mechanical and electrical aspects of our technologies.  Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in establishing a business in our intended industries.  Outside of the high levels of expertise noted above and our concentrated effort to be the leading provider in our industries, there is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably.





Our future operating results will depend upon many factors, including:





·
The continuation of our efforts to raise adequate working capital through equity investment, traditional financing, and the generation of sales revenues;


·
The continued success of lab and field testing that supports the development of our EcaFlo® technology product lines;


·
Demand for our EcaFlo® equipment and solutions;


·
The level of our competition;


·
Our ability to maintain key management and technical support staff, and to attract more employees with similar characteristics; and


·
The continuation of our efforts to efficiently develop products to commercialize while maintaining quality and controlling costs.





To achieve profitable operations, we must successfully act on the factors stated above, along with continually developing ways to enhance our production efforts.


19


We are subject to significant competition from large, well-funded companies.





The industries we intend to compete in are characterized by intense competition and rapid and significant technological advancements.  Many companies, research institutions and universities are working in a number of areas similar to our primary fields of interest to develop new products, some of which may be similar and/or competitive to our products.  Furthermore, many companies are engaged in the development of water “purifying” products which may be similar and/or competitive to our products and technology.  Most of the companies with which we compete have substantially greater financial, technical, manufacturing, marketing, distribution and other resources than us.





We are highly dependent on William E. Prince, our Chief Executive Officer, President and Chairman, and other key employees.  The loss of Mr. Prince or those employees, upon whose knowledge, leadership and technical expertise we rely, would harm our ability to execute our business plan.





Our success depends heavily upon the continued contributions of William E. Prince, whose knowledge, leadership and technical expertise would be difficult to replace, and on our ability to retain and attract technical and professional staff.  If we were to lose Mr. Prince’s services, our ability to execute our business plan would be harmed and we may be forced to cease operations until such time as we could hire a suitable replacement for him.  We also have other key employees who manage our operations and perform critical engineering and design functions, as well as direct the overall marketing and sales of our products.  If we were to lose their services, senior management would be required to expend time and energy to replace and train their replacements.  To the extent that we are smaller than our competitors and have fewer resources, we may not be able to attract the sufficient number and quality of staff.





Potential issuance of additional common stock could dilute existing stockholders.





We are authorized to issue up to 200,000,000 shares of common stock.  To the extent of such authorization, our board of directors has the ability, without seeking stockholder approval, to issue additional shares of common stock in the future for such consideration as the board may consider sufficient.  We may seek additional equity financing, which if sought or obtained may result in additional shares of our common stock being issued.  The issuance of additional common stock in the future will reduce the proportionate ownership and voting power of the common stock held by our existing stockholders.





Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.





Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock.  Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10.  Those rules require broker-dealers, before effecting transactions in any penny stock, to:


20





·  Deliver to the customer, and obtain a written receipt for, a disclosure document;


· Disclose certain price information about the stock;


·
Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;


·
Send monthly statements to customers with market and price information about the penny stock; and


·
In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.





Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities.These additional procedures could also limit our ability to raise additional capital in the future.





Our stock is thinly traded; as a result, investors may be unable to sell at or near ask prices or at all if they need to liquidate their shares.





The shares of our common stock have historically been thinly-traded on the OTC Bulletin Board, meaning that the number of persons interested in purchasing our common shares at or near ask prices at any given time may be relatively small or non-existent.  This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.  As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.  We cannot give any assurance that a broader or more active public trading market for our common shares will develop or be sustained, or that current trading levels will be sustained.  Due to these conditions, we can give investors no assurance that they will be able to sell their shares at or near ask prices or at all if they need money or otherwise desire to liquidate their shares.





Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.





21


Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.





We have a limited number of personnel that are required to perform various roles and duties as well as be responsible for monitoring and ensuring compliance with our internal control procedures.  As a result, our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.  Investors relying upon this misinformation may make an uninformed investment decision.





If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board, which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.





Companies trading on the OTC Bulletin Board, such as us, generally must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board.  More specifically, the Financial Industry Regulatory Authority (“FINRA”) has enacted Rule 6530, which determines eligibility of issuers quoted on the OTC Bulletin Board by requiring an issuer to be current in its filings with the Commission.  Pursuant to Rule 6530(e), if we file our reports late with the Commission three times in a two-year period or our securities are removed from the OTC Bulletin Board for failure to timely file twice in a two-year period, then we will be ineligible for quotation on the OTC Bulletin Board.  As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.  As of the date of this filing, we have had one late filing reported by FINRA for the first quarter of 2008.





Item 2. Recent Sales of Unregistered Securities





Stock Issuances Pursuant to Convertible Notes and Debenture Agreements





On January 6, 2010, we issued 6,264,329 shares of our restricted common stock to two (2) convertible note holders pursuant to their conversion of $626,432 of accrued principal and interest due under their convertible notes, at a conversion rate of $0.10 per share, on December 31, 2009.


22


On February 25, 2010, we issued 962,000 shares of our restricted common stock to certain debenture holders pursuant to their conversion of $240,500 of principal amounts due under their debenture agreements, at a conversion rate of $0.25 per share, on February 12, 2010.





On March 11, 2010, we issued 106,740 shares of our restricted common stock to certain note holders pursuant to their conversion of $26,685 of accrued principal and interest under their convertible notes, at a conversion rate of $0.25 per share, on March 5, 2010.





We believe that the issuance of the above shares is exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The recipients of the shares were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the financial statements and 34 Act reports.  We reasonably believed that the recipients, immediately prior to their conversion of the notes, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investments.  The recipients had the opportunity to speak with our management on several occasions prior to their investment decisions.





Stock Issuances Pursuant to Subscription Agreements





In the first quarter of 2010, we issued a total of 180,000 shares of our restricted common stock to two (2) accredited investors.  The accredited investors purchased the 180,000 shares between January and March of 2010 for a total purchase price of $18,000, all of which was paid in cash.





We believe that the sale and issuance of the above 180,000 shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The shares were sold directly by us and did not involve a public offering or general solicitation.  The recipients of the shares were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the financial statements and 34 Act reports.  We reasonably believed that the recipients, immediately prior to the sale of the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investments.  The recipients had the opportunity to speak with our management on several occasions prior to their investment decision.  There were no commissions paid on the issuance and sale of the shares.





Stock Issuances Pursuant to the Exercise of Options and Warrants





On January 13, 2010, Valgene Dunham, a Director of the Company, exercised 10,000 options at a price of $0.11 per share for a total purchase price of $1,100, all of which was paid in cash.  The 10,000 shares were issued on January 14, 2010.





On January 5, 2010, a warrant holder exercised 123,214 warrants through a cashless exercise by tendering to us its warrant to purchase 150,000 shares, thereby using the 26,786 remaining warrant shares to satisfy the exercise price.  The 123,214 shares were issued on January 20, 2010.


23


On March 30, 2010, a warrant holder exercised 150,000 warrants at a price of $0.10 per share for a total purchase price of $15,000, all of which was paid in cash.  The 150,000 shares were issued on March 30, 2010.





We believe that the issuance of the above shares is exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The recipients of the shares were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the financial statements and 34 Act reports.  We reasonably believed that the recipients, immediately prior to the issuance of the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investments.  The recipients had the opportunity to speak with our management on several occasions prior to their investment decisions.





Stock Issuances to Employees and Directors





On February 2, 2010, we issued a total of 450,000 shares of our restricted common stock to the following employees and directors:





Name
Title
Number of SharesWilliam E. Prince
Employee & Director
255,000Marion C. Sofield
Employee & Director
130,000S. Larry Jones
Employee
25,000Stuart A. Emmons
Employee
7,500Valgene Dunham
Director
5,000E. Wayne Kinsey, III
Director
5,000David N. Harry
Director
5,000Timothy W. Shields
Employee
12,500Sheryl B. Marsh
Employee
5,000





We believe that the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The recipients of the shares were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the financial statements and 34 Act reports.  We reasonably believed that the recipients, immediately prior to the issuance of the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investments.  The recipients had the opportunity to speak with our president and directors on several occasions prior to their investment decisions.





Warrant Issuances





On February 25, 2010, we issued 225,000 warrants to purchase shares of our restricted common stock to Catalyst Financial Resources, LLC pursuant to its corporate services agreement.  The warrants are exercisable at $0.28 per share and expire on February 25, 2013.


24


On March 5, 2010, we issued 200,000 warrants to purchase shares of our restricted common stock at $0.10 per share expiring June 30, 2012, and 100,000 warrants to purchase shares of our restricted common stock at $0.10 per share expiring July 6, 2012, as additional consideration for loans received in 2009.





We believe that the issuance of the above warrants is exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The recipients of the warrants were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the financial statements and 34 Act reports.  We reasonably believed that the recipients, immediately prior to the issuance of the warrants, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investments.  The recipients had the opportunity to speak with our management on several occasions prior to their investment decisions.





Subsequent Issuances





Stock Issuances Pursuant to Convertible Notes and Debenture Agreements





On April 15, 2010, we issued 128,000 shares of our restricted common stock to certain debenture holders pursuant to their conversion of $32,000 of principal amounts due under their debenture agreements, at a conversion rate of $0.25 per share, on March 1, 2010.





We believe that the issuance of the above shares is exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The recipients of the shares were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the financial statements and 34 Act reports.  We reasonably believed that the recipients, immediately prior to their conversion of the notes, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investments.  The recipients had the opportunity to speak with our management on several occasions prior to their investment decisions.





Stock Issuances Pursuant to Consulting Agreements





On April 26, 2010, we issued 200,000 shares of our restricted common stock to 3CD Consulting, LLC, pursuant to the receipt of $200, as per the terms of our April 1, 2010 consulting agreement which allows for the purchase of the 200,000 shares at a price of $0.001 per share.





We believe that the issuance of the above shares is exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The recipient of the shares was afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decision, including the financial statements and 34 Act reports.  We reasonably believed that the recipient, immediately prior to the issuance of the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investment.  The recipient had the opportunity to speak with our management on several occasions prior to their investment decision.


25


Stock Issuances Pursuant to the Exercise of Options and Warrants





On April 7, 2010, a warrant holder exercised 68,478 warrants through a cashless exercise by tendering to us its warrant to purchase 150,000 shares, thereby using the 81,522 remaining warrant shares to satisfy the exercise price.  The 68,478 shares were issued on April 26, 2010.





On April 7, 2010, a warrant holder exercised 500,000 warrants at a price of $0.10 per share for a total purchase price of $50,000, all of which was paid in cash.  The 500,000 shares were issued on April 30, 2010.





On April 8, 2010, a warrant holder exercised 200,000 warrants at a price of $0.05 per share for a total purchase price of $10,000, all of which was paid in cash.  The 200,000 shares were issued on April 26, 2010.





On April 12, 2010, a warrant holder exercised 530,000 warrants at a price of $0.10 per share for a total purchase price of $53,000, all of which was paid in cash.  The 530,000 shares were issued on April 15, 2010.





On April 15, 2010, a warrant holder exercised 500,000 warrants at a price of $0.10 per share for a total purchase price of $50,000.  The 500,000 shares were issued on April 30, 2010.





On April 30, 2010, a warrant holder exercised 500,000 warrants at a price of $0.10 per share for a total purchase price of $50,000, all of which was paid in cash.  The 500,000 shares were issued on May 12, 2010.





We believe that the issuance of the above shares is exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The recipients of the shares were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the financial statements and 34 Act reports.  We reasonably believed that the recipients, immediately prior to the issuance of the shares, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investments.  The recipients had the opportunity to speak with our management on several occasions prior to their investment decisions.





Warrant Issuances





On April 1, 2010, we issued 400,000 warrants to purchase shares of our restricted common stock to 3CD Consulting, LLC pursuant to its consulting agreement.  The warrants are exercisable at $0.30 per share and expire on December 31, 2011.





On April 12, 2010, pursuant to a promissory note, we issued 150,000 warrants to purchase shares of our restricted common stock.  The warrants are exercisable at $0.60 per share through December 31, 2010, or for $1.00 per share from January 1, 2011 through June 30, 2011.


26


On April 16, 2010, in connection with the sale of five units of an 8% debenture instrument, we sold 250,000 warrants to purchase shares of our restricted common stock for $2,500.  The warrants are exercisable at $0.75 per share through December 31, 2010, or for $1.20 per share from January 1, 2011 through December 31, 2011.





We believe that the issuance of the above warrants is exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2) and Regulation D Rule 506.  The recipients of the warrants were afforded an opportunity for effective access to files and records of the Company that contained the relevant information needed to make their investment decisions, including the financial statements and 34 Act reports.  We reasonably believed that the recipients, immediately prior to the issuance of the warrants, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investments.  The recipients had the opportunity to speak with our management on several occasions prior to their investment decisions.





Issuer Purchases of Equity Securities





The Company did not repurchase any of its equity securities during the quarter ended March 31, 2010.





Item 5. Other Information.





None.




Item 6.                       Exhibits.
 
 Exhibits
 
 Incorporated by referenceExhibit

number

Exhibit description

Filed

herewith

Form

Period

ending

Exhibit No.

Filing

date2(a)

Agreement and Plan of Merger between Coronado Explorations Ltd and Naturol, Inc.



8-K



2(a)

10/25/012(b)

Amendment No. 1 to the Agreement and Plan of Merger between Coronado Explorations Ltd and Naturol, Inc.



8-K



2(b)

1/25/022(c)

Agreement and Plan of Merger and Reincorporation



8-K



2(c)

3/10/083(i)(a)

Certificate of Incorporation of Coronado Explorations Ltd. – Dated February 2, 1999



10SB12G



2(a)

6/9/993(i)(b)

Amended and Restated Articles of Incorporation of Coronado Explorations Ltd. – Dated May 20, 1999



10SB12G



2(b)

6/9/993(i)(c)

Certificate of Amendment of Certificate of Incorporation of Coronado Explorations Ltd. – Dated October 5, 2000



10-KSB

1/31/02

3(i)(c)

4/30/023(i)(d)

Articles of Incorporation of Naturol, Inc. – Dated June 9, 2001



10-KSB

1/31/02

3(i)(d)

4/30/02
  27
  
 Incorporated by referenceExhibit

number

Exhibit description

Filed

herewith

Form

Period

ending

Exhibit No.

Filing

date3(i)(e)

Certificate of Amendment to Articles of Incorporation of I.E.T., Inc.



10-QSB

6/30/04

3

8/23/043(i)(f)

Certificate of Amendment of Certificate of Incorporation of Naturol Holdings Ltd. – Dated May 5, 2004



10-QSB

3/31/04

3(i)

5/14/043(i)(g)

Certificate of Merger between Coronado Subsidiary Corp. and Naturol, Inc. – Dated January 14, 2001



8-K



3(i)(g)

1/25/023(i)(h)

Articles of Incorporation of Integrated Environmental Technologies, Ltd. – Dated January 11, 2008



8-K



3(i)(h)

3/10/083(i)(i)

Articles of Merger of Integrated Environmental Technologies, Ltd., Nevada corporation and Integrated Environmental Technologies, Ltd., Delaware corporation – Dated February 15, 2008 (Nevada)



8-K



3(i)(j)

3/10/083(i)(j)

Certificate of Merger of Integrated Environmental Technologies, Ltd., Nevada corporation and Integrated Environmental Technologies, Ltd., Delaware corporation – Dated February 18, 2008 (Delaware)



8-K



3(i)(j)

3/10/083(ii)(a)

Bylaws of Coronado Explorations Ltd. – Dated February 9, 2001



8-K



3(ii)(e)

1/25/023(ii)(b)

Bylaws of Naturol, Inc. – Dated June 9, 2001



10-KSB

1/31/02

3(ii)(f)

4/30/023(ii)(c)

Bylaws of Integrated Environmental Technologies, Ltd., a Nevada corporation – Dated January 11, 2008



8-K



3(ii)(c)

3/10/0810.12

Employment Agreement of William E. Prince, dated January 3, 2005.



8-K



10.4

1/07/0510.13

Employment Agreement of Marion Sofield – January 3, 2005



8-K



10.5

1/07/0510.14

Addendum to Marion Sofield’s Employment Agreement – Dated February 28, 2005



10-KSB

12/31/04

10.6

3/30/0510.18

Stock Acquisition Agreement dated June 20, 2007



8-K



10.1

8/21/0710.19

Exclusive License and Distribution Agreement dated June 20, 2007



8-K



10.2

8/21/0731

Certification pursuant to Section 302 of the Sarbanes-Oxley Act

X32

Certification pursuant to Section 906 of the Sarbanes-Oxley Act

X
 
  28
  SIGNATURES
 
 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 INTEGRATED ENVIRONMENTAL TECHNOLOGIES, LTD.
 (Registrant)
 
 
 
 By: /S/ William E. Prince
 William E. Prince, Chief Executive Officer
 And Principal Financial Officer (On behalf of
 the registrant and as principal accounting
 officer)
 
 Date:  May 14, 2010
 
  29